The Australian Government is yet to announce whether it will allow Chinese government associated companies to help build the new 5G mobile network.

Australian intelligence agencies are believed to have warned the Government to exclude companies like Huawei and ZTE from bidding.

But key allies, the United States and Canada, are increasingly concerned about security risks on another front with such firms.

Huawei has been funding new generation communications research at universities in Canada and the United States alarming the intelligence community across North America. ZTE is looking to do the same thing.

Andy Ellis joins PM, who is the former assistant director at Canada's intelligence service and CEO of consulting group ICEN.

He says the involvement of Huawei in particular presents a number of risks for countries like Canada and Australia.

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LINDA MOTTRAM: The Australian Government is yet to announce whether it will allow Chinese Government-associated companies to help build the country's new 5G mobile network.

But key allies, the United States and Canada, are looking closely at the security risks they pose.

One such firm, Huawei, has been funding new-generation communications research at universities in Canada and the United States, raising concerns within the intelligence community across North America.

Another company, ZTE, is looking to do a similar thing.

Andy Ellis is the former assistant director at Canada's Intelligence Service and is CEO of consulting group ICEN.

He says the involvement of Huawei, in particular, with Chinese companies present a number of risks for countries like Canada and Australia.

ANDY ELLIS: What they've done is: they've funded post-secondary institutions in Canada to conduct research and development on the 5G network, telecommunications systems and high technology writ large.

And the really interesting thing that came out recently was the number of patents that had been registered by the Canadian institutions, through which Huawei and other companies are investing. So by them investing into Canadian know-how, research and development, you know, they are reaping the benefits of it.

So what's being suggested by a lot of officials within the government now and people like me who have left the government, both in Canada and the United States, is that a real serious look needs to be taken at the intellectual property that is being either acquired covertly through the cyber-espionage that you are talking about, or that's being procured through purchases.

And studies need to be undertaken as to whether or not universities should allow so much of their intellectual property to be owned and controlled by foreign enterprises.

LINDA MOTTRAM: On the question of cyber-espionage and companies like Huawei, there's been a strong push-back in Australia from the company here.

I'll just play you a little of what of the chair of Huawei Australia, John Lord, had to say recently, speaking to my colleague Hamish Macdonald:

HAMISH MACDONALD: Are you familiar with China's national intelligence laws released in June of last year? I mean, let me read to you Article 7 of those laws:

"All organisations and citizens shall, in accordance with the law, support, cooperate with and collaborate in national intelligence work."

Can you see why that might be problematic for Australia?

JOHN LORD: I see that the Chinese law we will obey in China. In Australia we obey Australian laws. In the UK we obey UK laws. Whichever country or region we're in, we obey the laws and rules of that country.

HAMISH MACDONALD: But if that law in China conflicts with laws here in Australia, which does Huawei choose?

JOHN LORD: The Australian law. Yes.

HAMISH MACDONALD: You expect the Australian public to believe that this giant Chinese telecommunications company would choose the Australian law over the Chinese law?

I'm just wondering, Andy Ellis, whether you accept John Lord's assurance on the laws that Huawei obeys?

ANDY ELLIS: I think it's naïve and I don't know whether it is wilfully naïve or it is naïve because he just doesn't understand.

But if you want to exploit opportunities, you can obey Australian law all you want but in understanding and using your equipment in networks, you don't exploit that network from Australia. You exploit it where it is safe.

It is basically: they are coming in, walking through your neighbourhoods and opening doors.

They are not going in. They are not robbing the houses, but they are going back and finding a way to virtually do so.

So, you know, it follows both laws under that argument that was made by Mr Lord.

I understand what he is saying. He is an employee of the company. But I think it is naïve to suggest that, you know, cyber work is undertaken at the destination from which the information is acquired.

LINDA MOTTRAM: And so, as Australia considers these issues around Huawei, you mentioned that Huawei had been banned from some projects in Canada.

Can you give us a read on how successful that approach taken in Canada has been? Because Huawei still has a very significant presence in the development of 5G in Canada.

ANDY ELLIS: You're right. They've been limited - I'm not sure to what degree - in their access to government networks, which I think is too narrow and too short-sighted. But you know, a government decision was taken in this country that the investment and the money that they're willing to put into the 5G network here is worth the risk.

That's not the case in the United States and it is not the case in other countries.

The very serious consideration has to be given to, again, the remote exploitation of whatever accesses they are able to do if they set up the network.

You know, if I were trying to collect covertly information from an adversary, I'd be happy to do all the research and development on their network, in their country; and then go home and exploit it because I know where all the doors are. I know what all the codes are.

It's really not that complex, especially given that your broadcaster read from Chinese legislation. That's pretty loud and clear: the Chinese are going to want to exploit opportunities. So that's number one.

Number two: you talk about the Five Eyes network. What impact will this have, whether it be Canada, Australia or anyone else, on some of the biggest partners in the Five Eyes; you know, the biggest one being the United States?

Will the United States continue to share the quality and quantity of information that they had before with Canada and Australia, if our networks have been designed and implemented by companies like Huawei or ZTE?

I'm not saying Huawei particularly, but I'm saying state-owned enterprises that are under the control of a foreign government whose interests are not always the same as ours.

LINDA MOTTRAM: Andy Ellis, thank you very much for speaking with us.

ANDY ELLIS: My pleasure.

LINDA MOTTRAM: Andy Ellis is the former assistant director at Canada's Intelligence Service.